Office Depot to close 400 stores by 2016

Boca Raton, Fla. -- Office Depot will close at least 400 U.S. stores during the next two years as part of its plan to consolidate operations after its acquisition of OfficeMax last November. The closings were not unexpected since there are many locations where the two brands have stores in close proximity to one another. The retailer also raised its full-year adjusted operating income forecast after reporting better-than-expected first quarter results amid cost cutting efforts.

Office Depot said the stores will be closed by 2016, with 150 of the shutterings coming at the end of this year. The company, which currently operates about 2,000 stores, said it had not finalized which locations would be closed.

“One of our 2014 critical priorities is to improve our store footprint in North America to best meet customer demand, ensure we are appropriately positioned in the markets we serve, and align with our unique selling proposition which we are developing this year,” said Roland Smith, chairman and CEO of Office Depot. “The overlapping retail footprint resulting from the merger provides us with a unique opportunity to consolidate and optimize our store portfolio, while maintaining the retail presence necessary to serve our customers.”

Smith said the company anticipates the store closures will generate annual run-rate synergies of at least $75 million by the end of 2016, and will begin to be accretive to earnings in 2015.

Big-box office supply retailers have been hit hard by changing shopping patterns and online competition. In March, Office Depot rival Staples announced it planned to close 225 stores in North America.

In the three months ended March 29, Office Depot reported a net loss of $109 million, compared to the same period a year ago, before the purchase of Office Max, when the company suffered a loss of $7 million. Sales rose to $4.4 billion, from $2.7 billion last year. The company reported $96 million in merger-related charges.

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